ECB divided? It’s NFP Friday
City Index May 3, 2013 1:52 PM
<p>It’s been the usual pre-NFP session in Asia, not helped with Japan still celebrating golden week. The euro still languishes pretty close – the lows […]</p>
It’s been the usual pre-NFP session in Asia, not helped with Japan still celebrating golden week. The euro still languishes pretty close – the lows (1.3036) made following the ECB announcement and press conference yesterday. As I mentioned yesterday the 25-basis-point cut was already priced into the single currency which saw the euro initially rally back above 1.3200 following the announcement. With ECB President Draghi again talking about negative deposit rates to get the banks lending, the euro crumbled. I personally think this is another classic European plan to make a plan. We have heard the ECB President mention negative deposit rates before so this isn’t new news and there wasn’t any detail on how this will be achieved in yesterday’s statement as far as I can see. Interesting that the press are picking up on how many members voted for a 50-basis-point cut with the FT highlighting a spilt from the Bundesbank with Jorg Asmussen voting against the cut and President Weidmann voting in favour in of the cut. Both members share scepticism that the cut would have any effect on market interest rates.
Turning to today we have the all important UK services PMI data release this morning, with the market looking for 52.4 following stronger manufacturing data earlier this week and a stronger growth story last week. As always I point out that the UK is a service driven economy these days so this number is important to what some are calling the recovery.
The main event of the day will be the NFP release, with the market looking for a rebound from 88k last month to 140k with the unemployment rate looking to hold steady at 7.6%. We have seen mixed data this week leading up to the labour report, with the ADP report showing a weak reading from the private sector as the jobless claims data revealed a brighter picture.
Supports 1.3030-1.2975-1.2955 | Resistance 1.3150-1.3245-1.33315
Supports 97.50-97.00-96.30 | Resistance 98.50-99.00-99.75
Supports 1.5500-1.5470-1.5410 | Resistance 1.555-1.5600-1.5630
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